In Commil USA, LLC v. Cisco Systems, Inc, the Supreme Court held that a defendant’s good faith belief in a patent’s invalidity is not a defense to induced infringement. The Court reasoned that “[t]he scienter element of induced infringement concerns infringement,” and not validity. [ii] Given the basis for the Supreme Court’s ruling and the underlying logic behind it, it would appear that a good faith belief in defenses such as inequitable conduct, patent misuse, or equitable estoppel, which are directed to enforceability rather than infringement, likely cannot be relied upon as defenses to claims of contributory infringement or inducement of infringement. As it has in past cases involving a question of inducement of infringement under §271(b), the Supreme Court focused on the more explicit language in §271(c) that contributory infringement requires “knowing the same to be especially adapted for use in an infringement of such patent” to conclude that both contributory infringement and inducement of infringement require “knowledge of the patent in suit and knowledge of patent infringement.”[iii] The Court identifies the question of first impression in this case as follows: “whether knowledge of, or belief in, a patent’s validity is required for induced infringement under §271(b).”[iv]
Before addressing the actual question presented, the Court considered whether the statute required knowledge of both the patent and infringement or, as Commil and the government argued, whether knowledge of only the patent would suffice. The Court first flatly rejected Commil’s and the government’s arguments, stating that the issue had been definitively decided by the Court’s prior holding in Global-Tech that “liability for induced infringement can only attach if the defendant knew of the patent and knew as well that ‘the induced acts constitute patent infringement.’”[v] The Court concluded that section of its opinion by rejecting Commil’s and the government’s position which would impose liability on a defendant who had a reasonable belief in an alternate claim construction because the defendant knew the acts might infringe and stating “Global-Tech requires more. It requires proof the defendant knew the acts were infringing. And the Court’s opinion was clear in rejecting any lesser mental state as the standard.”[vi]
Turning to the question presented, the Court held that inducement requires intent to bring about the specific result of infringement. Belief of invalidity, even in good faith, does not negate the scienter element for infringement because infringement and validity are separate issues under the Patent Act.[vii] The Court relied upon three primary arguments for reaching this holding. First, the issues of infringement and invalidity appear in different parts of the Patent Act and in the Act, the two are listed as separate defenses.[viii] Second, the Court reasoned that allowing this defense would undermine the presumption of validity under §282(a) of the Act because a good faith belief in invalidity would negate liability for induced infringement without meeting the standard of clear and convincing evidence needed to prove invalidity.[ix] Third, allowing the defense apparently would also undermine “the allocation of the burden to persuade on these questions, and the timing for the presentations of the relevant arguments,” which “are concerns of central relevance to the orderly administration of the patent system.”[x] In addressing the “simple truth” that an invalid patent cannot be infringed or that someone cannot induce infringement of an invalid patent, the Court noted that it “is because invalidity is not a defense to infringement, it is a defense to liability.”[xi]
The Court next turned to “practical reasons” for not allowing a good faith belief in invalidity serve as a defense to inducement of infringement. These include the fact that there are alternate paths to raise the issue of invalidity such as a declaratory judgment action, and inter partes review or ex parte reexamination and that the defense would increase the cost and complexity of litigation.[xii] Finally, in comments that arguably appear to undermine the force of the section affirming Global-Tech, the Court notes the “law is no stranger to the possibility that an act may be ‘intentional’ for purposes of civil liability, even if the actor lacked actual knowledge that her conduct violated the law.”[xiii]
The defenses of inequitable conduct, patent misuse and equitable estoppel not only do not appear in different parts of the Act as was the case with infringement and invalidity, they do not appear in the Act at all. Under this part of the Court’s reasoning, a good faith belief in any of these defenses would not be a defense to inducement or contributory infringement. With regard to the Court’s reasoning on the burden of proof, the issue is somewhat more muddled. For inequitable conduct, which requires proof by clear and convincing evidence,[xiv] the reasoning applies equally. For patent misuse and equitable estoppel, however, the result is different since, with some exceptions, the defendant bears the burden of proving those defenses only by a preponderance of the evidence.[xv] Similarly, with regard to the Court’s reasoning concerning the “the allocation of the burden to persuade on these questions, and the timing for the presentations of the relevant arguments,”[xvi] the result may be different since much of the focus in the defenses of inequitable conduct, misuse and equitable estoppel are on the patentee’s actions and could be developed, at least in part, during the patentee’s case in chief on cross examination. As to the Court’s practical reasons, none of these three defenses can be raised in post grant review proceedings in the USPTO. They potentially could be raised in a declaratory judgment action provided there is the requisite case or controversy. As to increasing the cost of litigation there would appear to be no basis to distinguish these defenses from invalidity under the Court’s analysis.
While there may be ways to distinguish one or more of these defenses from invalidity under some parts of the Court’s analysis, all of them suffer from the same fundamental shortcoming that, like invalidity, they are defenses to liability for infringement and not to infringement itself and, more specifically, not to knowledge of infringement. “And because of that fact, a belief as to invalidity [inequitable conduct, patent misuse, or equitable estoppel] cannot negate the scienter required for induced infringement.”[xvii] Despite refusing to recognize a good faith belief in a defense to liability, as opposed to a defense to infringement, as a defense to induced infringement or contributory infringement, the Court nevertheless confirmed “that an invalid patent cannot be infringed, or that someone cannot be induced to infringe an invalid patent, is in one sense a simple truth, both as a matter of logic and semantics.”[xviii]
This circles back to the issue of infringement itself. It is clear that whatever doubt that existed after Global-Tech, if any, as to whether a good faith belief in an alternate claim construction that would render the accused product non-infringing is a valid defense to vicarious liability has arguably been eliminated given that the Court used this precise fact patter in its opinion as an example of a viable defense.[xix] Presumably, for the same reason, a good faith belief in a non-infringement position that ultimately is unsuccessful, while not a defense to direct infringement, would be a valid defense to vicarious liability for inducement or contributory infringement. This result highlights the old adage that if one can choose between a good non-infringement defense and good invalidity defense, one should take the non-infringement defense.
[i] Commil USA, LLC v. Cisco Sys., Inc., 575 U.S. __, No. 13-896, slip op. (May 26, 2015).
[ii] Id., slip op.at 9.
[iii] Id. at 6 (emphasis added).
[v] Id. (quoting Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. __, No. 10-6, slip op. at 10 (May 31, 2011)).
[vi] Commil, slip op. at 9.
[viii] Id at 10.
[ix] Id. at 10-11.
[x] Id. at 11.
[xii] Id. at 12.
[xiii] Id. at 12-13.
[xiv] E.g., A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1010, 1041 (Fed. Cir. 1992) (en banc).
[xv] GFI, Inc. v. Franklin Corp., 88 F. Supp. 2d 619, 621, 635 (N.D. Miss. 2000), aff’d, 265 F.3d 1268 (Fed. Cir. 2001) (applying preponderance of the evidence standard where the misuse allegation was based on the patentee’s licensing conduct). However, depending on the basis for the misuse, courts may apply the clear and convincing standard. For example, where the allegation is misuse by asserting a patent in bad faith, “the clear and convincing evidence standard protects the plaintiff for only serious misuse will overcome the presumption that this infringement action was instituted in good faith.” Kockums Indus. Ltd. v. Salem Equip., Inc., 561 F. Supp. 168, 173 (D. Or. 1983); see also Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 877 (Fed. Cir. 1985) (bad faith in bringing patent infringement action must be proven by clear and convincing evidence).
[xvi] Commil, slip op. at 11.
[xvii] Commil, slip op. at 11.
[xix] Id. at 9.